With pressure on dual chair/CEO roles, Minnesota companies split on the issue

Both Target and UnitedHealth Group recently received pressure to essentially split the roles of chairman and chief executive.

Both companies are resisting the request from the Accountability Board, a nonprofit shareholder advocacy and investment group based in Massachusetts that promotes social, environmental and governance best practices among its portfolio of more than 200 public companies.

Earlier this summer, the nonprofit placed a similar shareholder proposal on the General Mills proxy, asking the consumer packaged foods company for the same split. Jeff Harmening currently holds both roles.

The idea to split the chairman of the board and CEO roles at companies where one executive holds both roles is a perennial good governance issue.

The Star Tribune looked at the 50 largest public companies in Minnesota to see how prevalent it is.

Two-thirds split the role. But among the largest companies, it was more common the chair and CEO roles were combined, with eight of the top 15 companies having dual appointments at chairman and CEO.

By and large, the results are typical, with 61% of the S&P 500 companies splitting the role.

Today, 39% of CEOs hold both roles‘, according to the index.

General Mills also received a similar shareholder proposal in 2022 by shareholder advocate John Chevedden. That year, about 42% of shares voted in support of the proposal.

This year at General Mills’ annual meeting on Sept. 30, the shareholder proposal only garnered 36% of the votes.

Proponents of the dual role say it makes governing a big corporation more efficient and cost-effective.

Companies that have the dual role also elect a lead independent director to collaborate with both the chair/CEO and other board members.

Target said in its proxy that year that it did not feel a mandated separation of the roles would “by itself deliver additional benefit for shareholders.”

The Accountability Board in 2024 put forth a different proposal to create an independent board chair, and Target wrote essentially the same response.

The 2024 vote only garnered 29% of shareholders’ support.

The group made a similar proposal on Oct. 1, asking that Cornell not maintain his chairman role when Michael Fiddelke takes over as CEO in February.

A couple of days later, the UnitedHealth Group proposal came. Stephen Hemsley currently holds both roles.

In its proposal on the General Mills proxy, the group wrote: “We ultimately believe vesting a single person with both executive and board leadership concentrates too much responsibility in a single person.”

Their arguments were similar in making their proposals in early October to both Target and UnitedHealth Group.

The Accountability Board has also filed other types of shareholder proposals, including one Oct. 6 with the Golden Valley-based medtech company Inspire Medical. That sought to declassify its board, meaning directors would stand for election each year.

Inspire’s board is divided into three classes, and the company said in its proxy that it regularly evaluates the structure and currently believes it “to be in the best interests of the company.”